Knowing when to say when: selling a business

The key to selling your business is knowing when to say when
By Gigi Guyton, Women, Work, and Community

When I owned my landscape design/build business in Charlotte, N.C., I worked with a business coach for 18 months to turn my business around. After he was long gone and the business was humming, I called him one day to vent frustration about a personnel matter. During our conversation he switched gears on me and asked, “Have you thought about an exit strategy?”

“An exit strategy?” I asked, shocked. I wasn’t expecting that. “Yeah,” he said. “It may be time. Why don’t you talk to a business broker and get a valuation of your business. Just have a conversation and see what he says.” It took me several months to mull that over. I wasn’t ready to sell. In my mind, selling meant quitting, and why would I want to do that? I had built the business with my own blood, sweat and tears for nearly eight years and the bad credit score made it difficult initially. Few experts helped me with high risk credit card processing to get my finances sorted. But before long, I began to become curious about the idea. I knew personally I was running out of steam and, more importantly, my partner and I were talking about moving to Maine.

I sold the business in 2007 to one of my employees – a talented colleague who has successfully carried the business into its 14th year. This may all sound sweet and easy, but knowing when to say when in business is a very hard decision. During the selling process, the business broker told me, “You’re going to cry about leaving your business more than your clients or your employees.” He was right.

Denise Novotny, a Portland SCORE volunteer, knows exactly what I mean. She made the decision to close her high-end clothing boutique in the Old Port called Simply Chic after four years. “It was one of those moments in your life that you say, ‘I don’t know that I’d want to do that again.’ The business is like part of your family because you live and breathe it when you run it.” Which is exactly the point: Knowing when to say when is about emotion — and numbers.  Novotny’s situation was a little different. She opened her store in 2005, and in 2007 moved to Exchange Street and watched her sales double. However, in the summer of 2008, she knew she had to take action.  “My sales dropped almost 40 percent in August, which was usually a peak month,” Novotny said. “I knew something was really going awry.”  Novotny received information from an analyst and some of her close vendors indicating there may be economic problems on the horizon. “I am a bit of a news junky myself, and had my ear to the ground,” she said. “The combination of seeing what was happening — the housing market, the news media — all of it had me a little bit on edge. We couldn’t explain it at the time, but we could read it, feel it and see it in the numbers.”
Novotny went to SCORE for help. This being pre-social media days, she tried everything, including bringing in a more moderate clothing line, but the end message was that people were having a hard time parting with their dollars. Novotny began discounting her products and closed her business in early 2009. “I’m absolutely glad I closed it,” she said.

Her advice? “Try to remain emotionally detached because there may come a point when you might have to say, ‘Am I in the right business at this time?’ For me the economy was going south. Are people going to spend money on high-end clothes? Hmm, probably not.”  And sometimes, life just happens. Mary Phipps stopped production at Pleasant River Soap Co. to take care of her aging parents. “This decision I made at an odd time when business was booming and growing in a big way,” she said. She had just been listed on the “Good Morning America” Shopping Guide, and in the March issue of Smart Retailer, which had started a flurry of national retail store inquiries. Having aging parents, and being a single mom of a 13- and 10-year-old, Mary decided to pull back. “I am happier than I have been in a long time, and know I made the right decisions.”